After having some success in talking up the rupee, India’s new central bank governor Raghuram Rajan is using his voice to bolster bond prices.

In a short statement late Wednesday, the Reserve Bank of India said it would ensure that India’s banks have enough cash “to support the flow of credit to productive sectors of the economy” and that it was ready to buy government bonds from the market to provide liquidity when needed.

Government bond prices, which had been reeling after the RBI unexpectedly hiked rates last week, rose Thursday, pushing down the yield on the benchmark 7.16% bond maturing in 2023 to 8.69% at one point from 8.79% Wednesday.

Under the previous governor Duvvuri Subbarao, the RBI only used its regular policy statements to remind people it would manage liquidity when needed, so Mr. Rajan’s sudden statement has many in the market pondering why the new central bank chief had gone out of his way.

Market watchers wondered why wouldn’t the RBI just announce measures if it was so worried about tight cash conditions? And if it isn’t worried about liquidity, why say anything at all?

“It was a very curious statement and I am not clear what its purpose was, besides cooling bond yields,” said A. Prasanna, an economist at ICICI Securities Primary Dealership in Mumbai. “There was a positive reaction today but the market is still worried about whether they will follow through with bond buybacks.”

Verbal intervention is one of the important tools used by central banks to send signals to investors. European Central Bank President Mario Draghi‘s comment last year that the ECB will do “whatever it takes to preserve the euro” is credited with changing the course of region’s debt crisis.

Analysts say verbal intervention works best when markets are gripped by panic and prices are out of step with fundamentals. In scary times, assurances from a central bank can help calm jittery investors.

When the rupee was weakening to new lows against the dollar, for example, “verbal intervention, supported by other factors, was successful,” said Krishnamoorthy Harihar, treasurer at FirstRand Bank in Mumbai. “In this case, the respite [in bond prices] is likely to be temporary unless the RBI follows up with action.”

Like India Real Time on Facebook here and follow us on Twitter @WSJIndia.